Cairns Marine Precinct

Briefing Note Summary

The Cairns Marine Precinct is vital to the economic diversification of Tropical North Queensland as the region recovers from devastating impacts of COVID-19 on its tourism and hospitality sectors.

Cairns is a strategic port for Defence. The Navy has announced it requires its new Regional Maintenance Centre (RMC) North-East in Cairns to become operational by late 2022, following its launch in January when it became the first of four new RMCs in Australia.

It is crucial that the Federal and State Governments work together to deliver on their commitment of $300m towards a Common User Facility as a centrepiece of fully developing the precinct infrastructure and tomorrow’s workforce.

A commitment is needed to provide long-term continuous sustainment programs and to support the redevelopment of ship and boat building in the precinct.

The Issue

Diversifying regional economic growth

The Cairns Marine Precinct (CMP) is a critical enabler of the Tropical North Queensland (TNQ) economy, supporting Australia’s strategic Defence and foreign policy initiatives, as well as border and fisheries, tourism, and maritime trade operations. The precinct is home to a large and diverse marine sector with 1603 commercial vessels across tourism, fishing and shipping, and cruising yacht sectors, in addition to several Royal Australian Navy (RAN) and Australian Border Force (ABF) vessels. The precinct also hosts superyachts and cruise liners visiting the Pacific. COVID-19 exposed the fragility of Cairns’ tourism-based economy, and the continued growth of the CMP is critical for economic diversification in the region. A sustainable marine capacity to ensure that both strategic Defence priorities and industry needs are met is vital to provide growth and jobs for the TNQ region.

Over the past few years, growing tensions between the United States and China have elevated the strategic importance of the Pacific, and Australia is now more than ever a frontline player in terms of engagement and development of the region. Australia’s Step-Up to the Pacific program, launched by the previous Federal Government, signalled a key change in Australia’s Defence posture as it prioritised the Indo-Pacific region.

The Albanese Government has further elevated the importance of Pacific engagement with new Foreign Affairs Minister, Penny Wong, making several trips to the region within weeks of the ALP’s election win. Additionally, in August the Government committed to delivering the most comprehensive Defence Strategic Review the country has seen in 35 years with its findings due by March 2023.

 Under the Security of Critical Infrastructure Act (2018), the Cairns port is a critical national infrastructure asset. The port includes HMAS Cairns, Australia’s most northern naval base on the eastern seaboard, and it plays a key strategic role in Australia’s northern naval capability. In acknowledging this role, in 2017-2018 the Federal Government committed to upgrading the precinct through staged investment.

 There is unmet and growing demand in naval, commercial and superyacht maintenance opportunities that supports a step change in ship sustainment capacity in the CMP. As outlined in Table 1, this investment needs to cater for larger vessels (up to 120m), have ship-lift capacity of 3500-5000 tonnes, provide up to 350m of extra wharf, see multiple large vessels simultaneously in dry dock, and allow considerable extra land for sustainment activities.

 The State Government business case released in January 2022 identified necessary infrastructure and skills requirements to ensure future growth and development in the precinct. This includes a common user facility, accessible by all shipyards. It is essential that the State and Federal Governments deliver on their $300m commitment towards funding the required infrastructure as outlined in the business case.

 A commitment to long-term continuous maintenance programmes by the RAN will assist the individual shipyards to forward plan in their own businesses and give them the ability to make investments in their own infrastructure. Understanding the opportunities in specialist boat and shipbuilding will also allow further private investment and give security to individual businesses of a pipeline of continuous work in the marine precinct.

 The CMP expansion needs to be complemented by a significant step up in industry workforce skills and training, both within the shipyards and also within the sector’s support industries. To support the CMP, there is a major role for training to upskill existing workers and contextualise training for the marine sector, and to recruit and grow the workforce through stronger training pathways.

Background

Expanding capabilities

The Cairns region has the largest marine services sector in northern Australia, and has a skilled, year-round permanent marine and engineering workforce of 4600 across 270 organisations.

In 2017 the Federal Government committed to a Phase 1 $24m investment into Ports North Leaseholds to enhance and modernise the three shipyards within the Cairns Marine Precinct. In 2020, the State Government committed $28m for increased wharf capacity as well as $2m for the detailed business case to inform a step-change within the precinct. Significantly, in the lead-up to the 2022 election, Federal ALP announced $150m towards the CMP, which was subsequently matched by the State Government.

The CMP is Australia’s maintenance centre for the RAN’s hydrographic vessels as well as Australian Border Force Cape Class vessels. It has serviced the Defence, Border Force, and marine industries for many years and, as home to Fleet Base Pacific (HMAS Cairns), is one of the few ports in Australia that can offer the Department of Defence significant expansion opportunities in berth and land facilities. RAN is currently undertaking long-term planning for HMAS Cairns, and, in conjunction with Ports North Master Planning and the CMP business case, is looking at expansion of the current site as well as future purpose and requirements for the base.

The CMP is the first of four new Regional Maintenance Centres (RMCs) for the RAN as part of Plan Galileo. The RMC North-East provides a national naval sustainment and maintenance hub, enabling the CMP to build on its present commitments of servicing vessels from HMAS Cairns, Darwin, the United States, and the Pacific Islands.

The State Government business case (released January 2022) highlights that one in six vessels in Australia over 15m – and four in five NQ registered vessels – are serviced in Cairns. The business case also highlights the existing shipyards are at or near capacity and that future demand will not be met with current capabilities.

In August, Federal Labor announced details of the first Defence Strategic Review the country has seen since 2012 and the most comprehensive in 35 years. Defence Minister Richard Marles said the review, which will be led by former Minister for Defence Stephen Smith and former Chief of the Australian Defence Force Sir Angus Houston, will ensure the ADF is well positioned to meet security challenges amid “more aggressive posture” from China. With these current geopolitical tensions, particularly in the Indo-Pacific region, and with internationally significant events such as China’s security deal with the Solomon Islands, it is essential that this review sees a strengthening of Defence Force operations in far northern Australia.

Without a significant step-up in infrastructure and capability at the CMP, existing operators may not be able to compete for all future sustainment contracts, and/or maintain or grow their business. This will result in a potential decline in market share and loss of economic opportunity, while overall regional activity levels in allied industries will also sharply decline. The objectives of the Defence Industrial Capability Plan are to broaden, deepen, and grow the industrial base of Defence to enhance Australia’s national security.

Next Steps

To ensure further growth and job creation in the region, to attract greater private investment, and to enable Defence to achieve its strategic goals, the following commitments for the CMP are needed to facilitate a transformation in the overall capacity and capability of the precinct:

Delivery of the joint State and Federal commitment of $300m towards infrastructure and support as outlined by the Cairns Marine Precinct business case released in January 2022.

A commitment of $24m across two years for stage two capacity increases within the three existing shipyards.

A commitment from Defence to provide additional vessels in Cairns and long-term continuous maintenance and sustainment programmes.

Support for ongoing innovation and re-establishment of a boat and small ship building industry in the precinct.

Consideration of a virtual sustainment college through the Great Barrier Reef International Marine The College will develop and deliver agile micro credentials that meet future Defence sustainment demands (see Education & Research priority).

Our Recommendation

  • That the Federal and State Governments deliver on their commitment to provide $300m towards the Common User Facility as outlined in the Cairns Marine Precinct expansion project business case.
  • Defence investment in HMAS Cairns, including a commitment to base and sustain additional vessels in Cairns.
  • That the Federal Government commits $24m over two years for stage 2 capacity increases within the three existing shipyards.
  • That the Queensland Government supports and facilitates the Federal expansion of HMAS Cairns, ensuring the Department of Defence delivers on the initial $155m upgrade of the Navy base by 2025.
  • That the $28m for early works to deliver in-water maintenance berths for the Cairns Marine Precinct expansion be constructed by the end of 2022.